Our new President rails against it, unions mock it, and the unemployed blame it. And not for no reason. The United States has been less than stellar in terms of trade, jobs, and economic growth.
Let’s take a look at the data, but then we’ll get into the nitty gritty. Undirected bluster to reduce trade deficits and create jobs will almost certainly trip over these nuances. Rather, an understanding of economic complexities must be accompanied by bold action.
So let’s get started.
Trade, Jobs, and Growth in the United States
We look to (what appears to be) unbiased and authoritative sources for authenticity. We use the ITC, International Trade Commission, in Switzerland for trade balances; the US BLS, Bureau of Labor Statistics, for employment; and the World Bank for overall economic data across countries.
According to the ITC, the United States had the largest merchandise trade deficit of any country in 2015, totaling $802 billion. This deficit exceeds the sum of the next 18 countries’ deficits. The deficit is not an outlier; the US merchandise trade deficit has averaged $780 billion over the last five years, and we have been running a deficit for the last 15 years.
The merchandise trade deficit has a significant impact on key sectors. Consumer electronics had a $167 billion deficit in 2015, apparel had a $115 billion deficit, appliances and furniture had a $74 billion deficit, and automobiles had a $153 billion deficit. Some of these deficits have grown noticeably since 2001, with consumer electronics increasing by 427 percent and furniture and appliances increasing by 311 percent. In terms of imports to exports, apparel imports outnumber exports by ten times, consumer electronics by three times, and furniture and appliances by four times.
The auto industry has a small silver lining: the deficit has increased by a relatively moderate 56 percent in 15 years, roughly equal to inflation plus growth. Imports outnumber exports by a startling but, in comparison, modest 2.3 times.
In terms of jobs, the BLS reports a 30% drop in US manufacturing jobs from 1990 to 2015. There were no job losses in any other major employment category. Four states in the “Belt” region collectively lost 1.3 million jobs.
The US economy has only made a stumbling step forward. Over the last 25 years, real growth has averaged just over 2%. Income and wealth gains during that time period primarily benefited the upper income groups, leaving the majority of Americans feeling stagnant and anguished.
The data paint a bleak picture: the US economy is beset by persistent trade deficits, is losing manufacturing jobs, and is experiencing low growth. This image, at first glance, indicates one component of the solution. Defend yourself against the onslaught of imports.
The Additional Viewpoints – Unfortunate Complexity
Unfortunately, simple explanations are rarely found in economics; complex interactions frequently underpin the dynamics.
So let’s look at it from a different angle.
While the United States has the largest merchandise trade deficit, it does not have the largest deficit as a percentage of GDP (GDP.)
On that basis, our country achieves about 4.5 percent. The UK has a 5.7 percent merchandise trade deficit as a percentage of GDP, while India has a 6.1 percent, Hong Kong has a 15 percent, and the UAE has an 18 percent. Over the last quarter-century, India has grown at a rate of more than 6% per year on average, while Hong Kong and the UAE have grown at rates slightly higher than 4%. Turkey, Egypt, Morocco, Ethiopia, and Pakistan, in total about 50 countries, have merchandise trade deficits averaging 9 percent of GDP, but grow at or above 3.5 percent per year.
Please take note of the term “merchandise” trade deficit. Merchandise refers to tangible goods such as automobiles, smartphones, clothing, and steel. Legal, financial, copyright, patent, and computing services are examples of intangible goods that are difficult to hold or touch. The United States achieves the largest trade surplus of any country, $220 billion, which serves as a significant partial offset to the merchandise trade deficit.
The trade deficit also obscures the total dollar value of trade. The trade balance is calculated by subtracting exports from imports. Imports, without a doubt, represent goods that are not produced in a country and, to some extent, lost employment. Exports, on the other hand, represent the monetary value of what must be produced or offered, and thus the employment that occurs. With a combined export value of $2.25 trillion per year, the United States ranks first in services and second in merchandise.
Now, we’re not trying to show that our trade deficit is benign or has no negative consequences. However, the data tempers our outlook.
To begin, using India as an example, we can see that trade deficits do not inherently limit growth. Countries with larger GDP deficits than the US have grown faster than the US. Further down, we will see examples of countries that had trade surpluses but did not grow rapidly, tempering the conclusion that growth is directly related to trade balances.
Second, given the importance of exports to US employment, we do not want actions to reduce our trade deficit to impede or restrict exports. This is especially true where imports outnumber exports by a narrow margin; efforts to reduce a trade deficit and create jobs here may result in greater job losses in exports.
Nuances of Job Loss
As previously stated, manufacturing has experienced significant job losses over the last quarter-century, with a 30% decrease, or 5.4 million jobs lost. On a proportional basis, key industries suffered even greater losses. Apparel lost 1.3 million jobs, or 77% of its US job base; electronics lost 540 thousand jobs, or 47%; and paper lost 270 thousand jobs, or 42%.
A state-by-state examination, on the other hand, reveals some surprises. While the manufacturing belt gets a lot of attention, no single state in that belt – Pennsylvania, Ohio, Illinois, Indiana, and Michigan – suffered the most manufacturing losses for a state. Rather, California lost 673 thousand manufacturing jobs, the most of any state. And, in terms of proportion, North Carolina lost more manufacturing jobs than any of the five belt states, with a loss of 8.6 percent of its total job base.
So, why don’t California and North Carolina come up in discussions about manufacturing decline? Perhaps because they create a large number of new jobs.
In the last quarter-century, the five belt states under consideration have lost 1.41 million manufacturing jobs. During that time, those five states offset those losses by adding 2.7 million new jobs to the labor force, demonstrating a strong response.
Similarly, four non-belt states – the aforementioned California and North Carolina, as well as Virginia and Tennessee – lost 1.35 million manufacturing jobs. These states, on the other hand, offset those losses by creating a net of 6.2 million new jobs.
Thus, the belt states added 1.9 jobs for every manufacturing job lost, while the four states added 4.6 jobs for every manufacturing job lost.
This disparity is replicated in other states. New York and New Jersey had a job growth to manufacturing job loss ratio of less than two (1.3 and 2.0, respectively), Rhode Island had a ratio of less than one (.57), and Massachusetts had a ratio of slightly more than two (at 2.2). Overall, the Northeast’s eight states (New England plus New York and New Jersey) lost 1.3 million manufacturing jobs, or 6.5 percent of the job base, but added only 1.7 jobs for every manufacturing job lost.
In comparison, seven states with heavy manufacturing employment and losses but outside the belt, the Northeast, and the CA/VA/TN/NC group, grew 4.6 jobs for every manufacturing job lost. Maryland, Georgia, and South Carolina are among the seven. Mississippi, Alabama, Missouri, and Arizona are among the states involved.
Here are the percentages of job growth for the four groups over the last quarter century.
8 states in the Northeast account for 12.6 percent of the total.
12.3 percent of the belt is made up of five states.
VA/TN/CA/NC 30.2 percent in four states
Group of Seven (27.3%) 7 States
Imports have undoubtedly resulted in the loss of manufacturing jobs. However, states in the last two groups recovered more quickly. North Carolina, which was once heavily reliant on furniture and apparel, lost 44 percent of its manufacturing jobs but did not see its economic base stagnate.
Why? Manufacturing job losses due to imports are only one factor influencing overall job growth. Climate, taxes, cost of living, unionization (or lack thereof), congestion (or lack thereof), government policies, educational base, and population trends all have an equal or greater impact on job creation. North Carolina, for example, has universities and research centers, medium-sized and relatively uncongested cities (Charlotte and Raleigh), low unionization, mild winters, and so on.
This is not to minimize the difficulties that individuals, families, and communities face as a result of manufacturing job losses. Furthermore, job growth in other industries does not provide a direct remedy for manufacturing declines. Higher-paying jobs in other industries frequently require college or advanced degrees, which those who lose their manufacturing jobs may not have.
However, there is one word of caution. Even in the absence of trade, technology and automation drive rising demand for higher education. Manufacturing workers build less directly; rather, they control machines, complex computer-controlled machines that build. Operating those machines, designing those machines, and programming those machines all require advanced degrees.
Consider the past. Automation reduced farm employment and nearly eliminated elevator operators, ice delivery workers, and telephone switchboard cord workers. Similarly, automation is having and will continue to have an impact on manufacturing employment.
Trade Deficits and Economic Growth
Let us now return to country-by-country comparisons in order to gain additional insights. Previously, we saw that countries with trade deficits experienced rapid economic growth. As a result, a deficit does not inherently cause economic stagnation.
Let’s take a look at the other side of the coin: do trade surpluses stimulate growth? China has unquestionably accomplished both. They have grown at an astonishing 9-10 percent per year on average over the last quarter century, and have a trade surplus with the rest of the world of $325 billion per year over the last five years.
Other countries have had similar success in terms of trade surpluses and strong growth. Korea, Ireland, Singapore, and Nigeria are among ten major economies with consistent trade surpluses and strong growth.
A broader scan, however, of the approximately 140 countries for which the World Bank/ITC publish data on both GDP growth and trade, reveals more complexities. Another group of 18 countries, in particular, achieved trade surpluses but did not grow significantly faster than the US.
This group includes Germany, Denmark, Sweden, Switzerland, and Brazil, among others. Overall, this group achieves trade surpluses of 5% of GDP, but has grown by only about 1.5 percent in real terms on average over the last quarter century. This growth rate lags behind that of the United States.
In addition, three countries with significant apparel imports to the US – Vietnam, Pakistan, and Bangladesh – are experiencing rapid growth while running trade deficits. Overall, no discernible relationship exists between trade surpluses/deficits and growth across the 140 countries.
In the World Bank data, what appears to be related to growth? In a counterintuitive way, per capita GDP. Countries with lower GDP per capita have grown faster, while those with the highest GDP per capita have averaged only a 2% increase over the last 15-25 years.
This inverse relationship, with higher per capita GDP aligned with lower growth, highlights a major, if not the primary, determinant of growth, productivity. GDP is the total of what a country produces. And for a given worker base, GDP can grow only if the workers produce more per worker, i.e. improve productivity.
Now compare the opportunity to apply efficiency gains in low per capita verses high per capita countries. Though not universally true, in many parts of low per capita countries good opportunities exist due to the limited adoption of the best available means. Efficiency gains in farming, and in manufacturing, and in distribution, basically in almost all facets of the economy, can be achieved by adopting efficiency measures already available from and proven by other countries.
Not so in high per capita countries. Such countries, in achieving high per capita GDP, their high output per worker, have likely already deployed available efficiency techniques. Efficiency gains cannot simply be pulled “off-the-shelf” or brought in from other countries or firms. Rather such gains must arise from, often complex and pain-taking, research, trial and analysis.
Productivity alone certainly does not determine economic growth. Population trends, labor force participation, education infrastructure, capacity utilization, these and other items also enable or retard economic growth. But productivity provides the base upon which those other factors build.
We should investigate a market that is receiving a lot of attention: the North American market. Much attention has been paid to trade in that market, as well as the impact of trade agreements.
Rather than increasing, the US combined trade deficit with Mexico and Canada has decreased by $5 billion per year over the last 15 years, from $87 billion to $82 billion. This decrease is made up of a $35 billion decrease in the deficit with Canada and a $30 billion increase in the deficit with Mexico. At the product level, the United States’ trade deficit with Mexico and Canada increased for automobiles ($23 billion year on year), oil ($11 billion), and electronics ($5 billion), but decreased for chemicals ($14 billion), aircraft/ships/trains ($7 billion), and apparel ($6 billion). The deficit also fell for paper, lumber, and metals while increasing for furniture, agriculture, and pharmaceuticals.
The $5 billion shift in the deficit obscures the rather massive growth in gross trade. Between 2001 and 2015, imports to the United States from Canada and Mexico increased by $245 billion, while exports increased by $251 billion. Take note of the balance of the increases, with export growth matching, if not exceeding, import growth. This indicates a relative balance in employment effects.
For example, North American trade may involve the United States sending medical equipment to Mexico that is not available from a Mexican manufacturer, and Mexico sending agricultural goods to the United States that are out of season for US farms. Both countries benefit from more products, and both benefit from more jobs. Even if Mexican imports substitute for goods that could have been produced in the United States (i.e., the imports harm American workers), the relative balance of import/export growth in North America means that this substitution is offset.
That relative balance is critical. Later, we will see a lack of such balance with China.
North American trade also contributes to the development of efficient supply chains. We can imagine that efficiently produced chemicals in the United States feed into low-cost auto part production in Mexico, while American engineers in Michigan design cars that will use engines from Canada and plastic parts from Mexico for assembly in Ohio. We would prefer that parts made in Mexico be made in America, as would engines, but the United States competes with the rest of the world in the auto market. In the absence of efficient supply chains, US automobiles will become increasingly uncompetitive in the global market. China has yet to make a significant inroad into the American auto market, and efficient North American supply chains will provide a hedge against the Chinese juggernaut.
Trade also reduces prices. While lower prices do not have the visceral impact of a plant closing, we can imagine American subcompact cars, produced at lower costs across North America, remaining competitive with imports. As a result, a recent college graduate in the United States opts for a Ford, Dodge, or Chevrolet over a Korean import.
Furthermore, North American trade provides greater economies of scale for American export producers. As a result, a Canadian or Mexican outdoor enthusiast chooses an American-made high-tech hiking boot over one made in Asia because the American manufacturer gained efficiencies by selling into the larger North American market.
What are our thoughts on this? On the whole, neutral. There are some advantages and disadvantages. Manufacturing jobs have been taken by Mexico, but exports to Mexico provide job opportunities. We compete with products from Mexico and Canada, but American producers sell to a larger market. We have a deficit, but it has stabilized. Imports have increased, but exports have increased more. And everyone benefits from lower prices and integrated supply chains.
Can North American trade agreements be improved? Certainly. Can American businesses bring a finer pencil to cost-cutting in order to keep manufacturing in the United States? Certainly. Should harsh public scrutiny and government scrutiny of plant closures put pressure on corporations driven by Wall Street interests? Certainly.
However, North American trade has a neutral impact on America.
However, this only applies to North America. Then there’s Asia Pacific. The impact is not so neutral, at least in terms of one country.
Asia and the Pacific
China is one country.
China is unrivaled.
China dominates trade dollars with the United States, and with the rest of the world for that matter.
China is the world’s leading merchandise exporter, with $2.2 billion in 2015. China’s exports have increased by 750 percent since 2001. China has the largest trade surplus of any country, with an average surplus of $325 billion over the last five years, and a surplus of $600 billion in 2015, as falling oil prices reduced the value of Chinese oil imports.
In terms of the United States, China had a $386 billion trade surplus in 2015. This Chinese trade surplus with the US (also known as the US trade deficit with China) accounts for 48% of the total US merchandise trade deficit for that year. Japan, which accounted for 16% of the US trade deficit in 2001, had dropped to 9% by 2015. Mexico accounted for 7.0 percent of our deficit in 2001 and, despite rhetoric, only 7.6 percent in 2015. Canada’s share fell from 12.6 percent to 2.6 percent. China accounts for a colossal portion of our trade deficit, dwarfing that of any other country.
Between 2001 and 2015, the United States’ trade deficit with China increased by $296 billion. That is a mind-boggling 84 percent of the total increase in the US deficit during that time period. The remaining 16 percent was distributed among our nearly 225 other trading partners.
The ratio of imports to exports is an important aspect of trade. That was discussed in the North American trade section. If that ratio of imports to exports is close to one, indicating that our imports do not vastly outnumber exports, then the trade export flow to that country nominally generates employment in the US, offsetting the imports’ lost employment opportunity. We run 1.1 with Canada and 1.25 with Mexico (and 0.7 and 1.22 on the rise since 2001), so that, as explained above, our trade flows with those countries balance and the employment impacts remain roughly neutral.
China does not fit into that category. With China, we have an import-to-export ratio of 4.3, or $4.30 in imports for every $1.00 in exports. As a result, Chinese imports reduce employment potential while exports to China generate no employment.
The exclusion of China from our trade statistics emphasizes China’s singular impact. Taking China out of the equation and including services, the US exported $2.1 trillion in goods and services in 2015, compared to $2.3 trillion in imports. On this basis, the imports-to-exports ratio falls to a more favorable 1.1, and the $200 billion deficit is less than 1% of GDP. After China, the countries with which the United States has the largest trade deficits are Germany and Japan. Without having to worry about low-wage labor, we should be able to compete with those two developed countries.
We can contrast China’s trade dominance in the United States with other Asian and Asian Pacific countries’ lack of dominance. India is an important example because it, like China, is a large developing and rapidly growing Asian country. As previously stated, China achieved a global trade surplus of $325 billion per year over a five-year period, while India had a trade deficit of $78 billion per year (5 year average). In terms of the United States, India earned a $25 billion surplus in 2015, a positive but small figure when compared to China’s $386 billion.
A broader look across Asia reveals the same thing. The 13 major Asian countries outside of China and India (for example, Japan, Australia, Indonesia, the Philippines, and Pakistan) have a combined world trade deficit of $45 billion over the last five years. The combined GDP of these countries equals China’s, but the US trade deficit with the 13 is roughly one-third that of China, and the increase in the deficit since 2001 is a modest $29 billion, one-tenth that of China. The key US import/export ratio with the 15 is 1.6, which is not exceptional but is less than the 4.3 with China.
China has since unmistakably outpaced its Asian neighbors in terms of trade success, both with the rest of the world and with the United States.
While many factors contributed to China’s success, one-of-a-kind trade deals are not among them. True, China joined the World Trade Organization in 2001, but every major country is a member. China simply managed trade and economic growth more effectively. Other countries, such as India, Korea, and Indonesia, performed much less spectacularly despite having the same opportunities and constraints as China.
China’s dominance is concentrated in four key sectors: electronics, furniture/appliances, apparel, and consumer goods. (These are referred to as the “four key groups.”) They had a trade surplus with the rest of the world of more than $750 billion in these four key groups (2015 year). Astounding.
Can the United States, or any other non-Asian country, challenge China’s dominance in the four key groups? For the time being, the train has most likely left the station. In the four key areas, China has built an intricate supply chain, extensive distribution infrastructure, and a large manufacturing base. These advantages are bolstered by their access to a large, low-cost labor pool. Other Asian countries appear ready to pick up the slack if China falters (for example, due to rising labor costs).
The United States can undoubtedly strengthen its capabilities in these four key areas, thereby preventing or even reversing some of China’s incursion. Overtaking China, on the other hand, would almost certainly necessitate years of steep tariffs to protect the American turnaround in the four key areas. We can imagine trade wars, which will almost certainly be ugly. And we can certainly anticipate significantly higher prices, owing to what would initially and possibly ultimately be high costs in US production, as well as the price impact of tariffs on imports.
However, China does not rule everywhere. They are minor players in a number of key industries, including automobiles, aircraft, chemicals, agriculture, pharmaceuticals, and, most importantly, fuel. China suffers from deficits in these areas.
Conclusions – Straight to the Point
So far, what conclusions can we draw?
A sole focus on trade deficit reduction will almost certainly not stimulate economic growth or job creation. Rather, economic growth is heavily dependent on productivity, and high per capita countries grow slower on average because productivity increases must come from innovation rather than adoption. Furthermore, state-by-state data show that job growth is influenced by a variety of factors other than manufacturing and exports.
The data also show that trade flows in North America are complex and intertwined, with no devastatingly large deficits. Rather, the net deficit has remained essentially constant since 2001, and the integration of North American markets is likely to help North America remain competitive in the global market, for example, in autos. Furthermore, given the close balance of imports to exports in that market for the US, an all-out focus on reducing trade deficits in North America is likely to reduce export employment to the same extent that deficit reduction improves export employment.
However, one unmistakable conclusion involves China. China has established a dominance in four key sectors, based on decades of integration and investment. In those areas, a frontal assault on the Chinese juggernaut is likely to waste resources. After China, Japan and Germany, which have no wage advantage, continue to have the largest trade deficits with the US.
Oil, automobiles, areas of strength, areas of divergence of interest, and export deficit
The incredible story of oil is hidden within the US trade deficit. Our trade deficit in oil and related products soared to more than $400 billion in 2008. In 2015, the deficit was reduced to less than $100 billion.
This story clearly demonstrates that petroleum is an area in which the United States possesses significant resources, advanced technology, and extensive infrastructure. Currently, the United States has a net trade deficit in oil. However, the incredible performance since 2008 points to petroleum as a potential source of further import reductions and actual net export growth.
Add to that the chemical, agricultural, pharmaceutical, and even advanced industrial and medical equipment sectors. As a result, the United States runs surpluses. Of course, there are also services. In the last decade, the United States’ trade surplus in services has tripled.
Autos is yet another success story. Remember that, unlike apparel, electronics, furniture, and paper, where imports decimated manufacturing employment and caused trade deficits to balloon by orders of magnitude, auto trade deficits grew modestly. In the last 25 years, auto manufacturing has lost only 14% of its jobs.
Furthermore, the integrated North America market arguably aids in US capabilities. China has a trade deficit in automobiles. In addition, US brands have found widespread acceptance and high sales in China. Autos, unlike socks or even smartphones, involve complex manufacturing and components, so China will not be able to close its manufacturing gap in autos overnight.
Recognize, however, a divergence of interest. Global corporations pursue financial objectives regardless of geography. Workers and governments both look for jobs that are geographically specific. As a result, there is a divergence. American workers want US automakers to produce Chinese-bound cars in the United States, while automakers, in order to meet financial targets, produce those Chinese cars in China.
We also have another, unexpected, divergence. While the United States ranks high in terms of imports and exports in dollar terms, the United States stands out in terms of GDP as a percentage of GDP. Imports account for only 12% of GDP in the United States, one of the lowest percentages among all countries. On the export front, the United States’ exports account for only 8% of GDP, which is not only among the lowest, but also nearly the lowest of any country.
This viewpoint suggests a new approach to manufacturing jobs in trade-intensive industries.
Compete rather than engage in trade wars.
What does this mean for our examination of trade flows, employment, and economic growth?
First, if we want overall American economic growth, we must not prioritize trade. Trade can, but will not always, boost overall growth. Rather, for overall growth, increase productivity (i.e., increase output per worker) or stimulate demand (i.e., attract more workers into the labor force and/or increase work hours per worker).
However, overall growth can leave some workers behind, such as those in traditional manufacturing jobs in trade-sensitive industries. True, workers can relocate to a state where job growth has occurred and obtain the necessary training and education to transition to a non-manufacturing job. We should, however, do more than simply expect workers to deal with globalization and automation.
We all, in the form of our government, should do our part to stimulate manufacturing employment.
What course of action should be taken? So, don’t pick a trade war with Mexico. We export roughly as much as we import, so a fight could cost as much as it could gain. Furthermore, we require a unified North American market in order to build supply chains and achieve the economies of scale required to compete globally.
This does not preclude direct, forthright discussions and even measures, but it does presuppose that we want Mexico as a partner.
Do not launch an all-out assault on Chinese imports. Even with Chinese strength here, the United States can certainly maintain and even expand its apparel production, furniture manufacturing, and electronics assembly. We cannot, however, compete with or overtake China’s and Southeast Asia’s well-developed, low-wage, integrated production bases.
What are our options?
Increase exports. America ranks at the bottom of the list in terms of exports as a percentage of GDP. And America produces goods that other countries want. China values American automobile brands, the world requires geopolitically neutral oil, our industrial equipment and medical technology compete on a global scale, American designer furniture and custom apparel can still compete, and our natural gas feedstocks enable low-cost, high-value chemical production.
How can public policy promote exports, i.e. how can corporate and national interests be aligned? In some ways, that is an unusual twist. Allow corporations to bring back – tax-free – billions of dollars in unrepatriated profits stashed in foreign countries. But only if the profits are reinvested in manufacturing and similar job creation.
We must proceed with caution because WTO rules prohibit direct export subsidies. This special tax-free incentive would thus focus on jobs, with exports serving as a means for corporations to generate sales to support jobs.
You could say that software companies have the most un-repatriated profits. And for displaced manufacturing workers, software development offers only a marginal opportunity.
Future self-driving cars, on the other hand, will be driven (literally) by software. Unlike smartphones, where China outproduced the US and the rest of the world, America appears to be at or near the forefront of self-driving car development, and hopefully production. Partnerships between software and auto companies make sense, and a repatriation incentive can help these partnerships advance.
What else can be done to boost exports? Make corporate performance public. Part 583, a rather obscure provision, is an example. This rule requires automakers to publicize their vehicles’ American and Canadian content. Mitsubishi, Audi, Volkswagen, Volvo, Mazda, and Kia, among others, perform horribly in this metric, with less than 10%. Honda, on the other hand, exceeds 50%.
However, I believe that few people pay attention to these statistics. As a result, Part 583 necessitates supercharging.
Simply put, broaden the rule dramatically. Specify that all major corporations, such as Walmart, GE, Exxon/Mobil, automakers, and so on, report key metrics such as local content percentages, percentage of foreign sales produced in the United States, and so on.
These two proposals, one for repatriation incentives and the other for Part 583 expansion, are presented as viable options for action. However, any comparable action can be taken. The strategy is crucial. Do not start trade wars with Mexico or China over imports. Certainly, stem the tide and negotiate aggressively.
However, do not retaliate. Start no trade wars. Rather, given the US’s export deficit, focus on expanding exports to Mexico, China, and other countries from areas of American strength.
Look ahead more and back less. We can’t go back in time and become the world’s electronics assembler. We can go on to excel in the design and production of self-driving cars, advanced aircraft and rockets, high volume and specialty chemicals, and services such as software, architecture, law, and environmental control.
Last words? Mexico is a partner, not an adversary. China is a market, not an adversary. Bring on the scrutiny for plant closures. Make export/import data available to corporations. Strike a hard bargain. Compete fiercely. Incentives should be used wisely to boost exports.
But don’t start fights. Also, avoid starting trade wars. Be tenacious. But also prudent.
Visit the website The Human Intellect for additional perspectives on this and other topics. The site has a plethora of short and medium-length discussions on topics ranging from ethics to Einstein, as well as a few longer articles like this one.